According to Bank of America Merryl Lynch, analysts say that this deal could double Coty’s sales. Shares for Coty went up 18% last month when it was reported that they had won an auction for Procter & Gamble’s businesses.
Coty distributes products for brands including Calvin Klein and Adidas, however this transaction will allow for them to grow and offer more. Some of the brands that Coty acquired include CoverGirl makeup and Gucci fragrances.
This sale comes as a result of Procter & Gamble’s trying to rid itself of some of its brands in order to focus only on its remaining core brands. The plan is to sell about 100 brands and keep about 65 of its stronger ones to develop them further.
P&G expects a one time gain from $5 to $7 billion while Coty expects about $550 million in cost savings on an annual basis over the next three years.
The transaction is expected to be finished in the second half of 2016, at which point Coty would like to raise some of its dividends to 50 cents per share.